How Twitter And Facebook's Business Models Compare

Twitter (TWTR) and Facebook (FB) are entrenched in the cultural zeitgeist and have a large impact on what we do. There are still many who use neither platform, but those people can be sure they know someone who does: Twitter currently has 232 million monthly active users and Facebook has 1.19 billion. In understanding how they affect users, it’s important to understand why they do.A major difference is that Facebook has a more traditional business model, while Twitter struggles as it relies on its novelty. With so many users, a crossover of expectations is not surprising. Furthermore, their functions have some overlap.

Not Like the Other

Twitter and Facebook are both forms of digital technology insofar as they represent the engineered application of social media science. They provide an advanced service of scale and sophistication of not found elsewhere. Microblogging platform Twitter has a more specific and arguably streamlined applicability: interests and conversations are intertwined with other trends users may see. Social network Facebook offers a robust method of self-representation and information, both personal and informal as well as impersonal and formal. Twitter began in 2006 and Facebook began in 2004. By all rights, the two could be in a deadlock, so what explains the stark contrast in success and scope?

Mark Zuckerberg’s explanation of Facebook’s goals provides context for the social network’s trajectory. In 2012, when filing the company’s S-1, he stated that Facebook “was built to accomplish a social mission – to make the world more open and connected.” Furthermore, he added, “we don’t build services to make money; we make money to build better services.” It is critical for a company to cultivate a user base that has bought into its premise. This confidence will give that company the latitude to cater those users by optimizing its execution.

Between the Lines

Both companies have achieved widespread visibility on other websites by developing share buttons. Twitter is less concerned with those who, specifically, respond to the call. Since a large amount of its revenue is derived from advertisements, Twitter is predominantly concerned with who is viewing timeline updates rather than posting them.

Unfortunately, Twitter’s initial commitment to efficient consumption and explication has lent itself to a bloating of content. Instead of short loglines to entice, users now face embedded and sponsored content, numerous threads, Twitter Cards and advertisements. The user interface and user experience have become more like Facebook but without the tools to handle the change. Nevertheless, Twitter has stubbornly committed to a 140-character maximum, which lies in contrast to the evolution of its brand. That limitation is a starlit reminder of the company’s foundational ethos.

One of the many ways in which Twitter can capitalize on its branded and user-generated content is by showing it on other websites. Given Twitter’s relatively smaller user base, the company has to make use of its infrastructure in creative ways. Simply put, Twitter has to make users out of anyone and everyone who isn’t already one. This, of course, is complicated. Twitter's ad sales are based on tailoring promoted Tweets to individual "active" users.

Twitter wants investors to recognize the potential of promoted Tweets on other channels. Investors say it would be misplaced to dangle a random advertisement out of context that was meant for a specific person or group. All the same, Twitter shares rose 23% since defying expectations in Q4 2014.

The Facebook Format

Facebook is able to advertise in a more dynamic sense because its system is more detailed. The website offers more spaces and places for content without getting in the way of its design. Of course, this plan isn’t ideal. Advertisements almost always take away from the experience of surfing a website. Furthermore, as of 2012, Facebook was making 1/10th Google's revenue with twice the page views.

This is probably a reality of the sector rather than an incrimination of Facebook’s design philosophy. At the same time, sponsored News Feed posts will probably confront the same obstacles found by Twitter. Typical advertising obstructs convenience. With that said, the news itself may offer Facebook another stream of revenue. Facebook is in talks with a number of media firms to host their content in exchange for ad shares.

The Bottom Line

Twitter and Facebook will be on top of their game for the foreseeable future. Twitter is in a more precarious position because it has to manipulate its content to reach users through advertisements. Facebook is more focused on making users happy with its system so the advertisements it does have are less objectionable.